Purchasing and Business Services Manual (PUR)

Effective: 7/1/1983

Revised: 11/1/2005

PUR 602–07: Sales and Use Tax

Purpose

To define requirements for payment of sales and use tax

Sources

Arizona Revised Statutes §§ 42–5001 to –5106; –5151 to –5167

Arizona Administrative Rules and Regulations, R15-5-101 to -5-2363

Policy

---

State and Local Taxes

The university is subject to the payment of state and local sales tax and state use tax. For information on exemptions for machinery and equipment used in research and development, see “Research and Development Exemption” at the end of this policy. Go to this link for the Certification Form for Tax Exempt Machinery and Equipment Purchased for Research and Development.

Taxes and Competitive Bidding

The amount of any applicable sales or use tax is not to be considered as a factor in determining low bid of competing bidders.

---

Federal Taxes

The university is not liable for federal excise taxes on transportation, freight, tires, automobiles, fuels, and other items carrying a federal tax.

Note:

Arizona State University is registered as a tax-exempt institution with the federal government, registration number A295813.

---

Sales Tax

Purchases made from in-state suppliers are subject both to state sales tax and to local sales tax from the city where the merchandise is purchased. Out-of-state suppliers who do a considerable amount of business in Arizona and have a sales office in Arizona are required to obtain a state sales tax license. If an out-of-state supplier lists an Arizona sales tax license number on the invoice, state sales tax applies to that purchase.

Exceptions

Sales tax exemptions include:

1. labor
2. professional services
3. warranty maintenance and service contracts costing less than $400
4. printed material for a library
5. items for resale
6. original artworks
7. prescription drugs
8. prosthetic appliances
9. custom software
10. retail purchases made from federal funds where title remains with the federal government (50 percent exemption)

    and

11. purchases directly from manufacturer made from federal funds where title remains with the federal government (100 percent exemption).

---

Use Tax

All out-of-state purchases other than those from out-of-state suppliers listing Arizona sales tax license numbers on invoices are subject to use tax. Use tax applies only to tangible personal property.

The university’s computer program accumulates use tax for all out-of-state purchases for which tax applies, and the university remits payment directly to the State Department of Revenue. Use tax added to invoices by out-of-state suppliers will not be paid.

Exceptions

Use tax exemptions include:

1. all items excluded from sales tax
2. solar energy devices
3. equipment repair or replacement parts
4. items purchased from out-of-state on which we have paid another state’s sales tax
5. freight from f.o.b. point to university
6. dues
7. foreign duty
8. royalties
9. licenses
10. rentals
11. broadcasting rights
12. booking fees
13. advertising

    and

14. purchases made from federal funds where title remains with the federal government.

---

Research and Development Exemption

Arizona Revised Statutes § 42–5061.B.14 and 42–5159.B.14 provide exemptions from state but not applicable local sales and use taxes for “machinery and equipment used in research and development.” Noncapital equipment may qualify for tax exempt status if used for research and development in the hard sciences. For more information on sales tax exemptions regarding equipment purchased for research and development, see the Financial Services Policies and Procedures Manual—FIN 120, “Sales Tax Exemption for Purchases.”

Cross-References

For additional information on state sales tax, see the Financial Services Policies and Procedures Manual—FIN 108, “Sales Tax.”

For information on coding disbursements for payments requiring tax reporting, see the Financial Services Policies and Procedures Manual—FIN 421–04, “Tax Reporting—IRS Form 1099.”

---

skip navigation bar PUR manual | ASU policies and procedures manuals | Index of Policies by Title | PUR manual contact | Purchasing and Business Services Web site

Back to Top